Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing with Treasury Secretary Jacob Lew:
The committee welcomes back the Secretary for his annual report on the IMF and the larger international financial system.
One of the greatest threats to economic stability today can clearly be seen on the monitors to my left and to my right; that of course is a real-time national debt clock. No president in our history has indebted our nation more than Barack Obama; more debt in six years than in our nation’s first 200. My laptop is awash with both official and private reports calling this level of debt totally unsustainable. Disappointingly, the Secretary’s prepared testimony contains nary a word about the threat that the unsustainable national debt presents to our economy and to hard-working middle income families.
In fairness, the Obama Administration is not alone in helping put a sovereign nation into insolvency. Europe has a number of practitioners as well. And when Europe runs out of money many turn to the IMF whose major source of funding happens to be U.S. taxpayers. Americans who clearly see the impending debt crisis and who rightly suffer from bailout fatigue are scratching their heads at the prospect of being called to continually fund and institutionalize too big to fail on a global scale. Thus the activities of the IMF must be carefully scrutinized by our committee.
What calls for even greater scrutiny is the role of the G-20’s Financial Stability Board and its American cousin the Financial Stability Oversight Council. These organizations wield immense power over our global economy and operative largely without transparency or accountability as part of a shadow regulatory system. As I assume all members of this committee know our witness heads up the FSOC and Treasury is a member of the FSB.
FSOC is especially concerning because among other matters it seemingly takes direction from the FSB, the Financial Stability Board. Again, a fairly secretive, unaccountable coalition of global bureaucrats that has found in FSOC a conduit to export its views on regulations and risk models to the United States. Just as one-size-fits-all mandates imported from Washington typically do more harm than good, the U.S. economy does not need a one-world view of risk imported from Europe. We tried that with Basel; think Greek sovereign debt and Fannie and Freddie mortgage backed securities. We know where that got us.
Yet FSOC has seemingly rubber-stamped decisions made by this international board when it comes to deciding whether large U.S. non-bank financial institutions should be designated as too big to fail. This does not appear to be coordination; it appears to be capitulation. Since today’s SIFI designations are tomorrow’s taxpayer-funded bailouts, this has potentially disastrous consequences for the American people.
The imposition of one global standard of financial regulation by this administration will undoubtedly harm American innovation and American economic growth. It can impinge on U.S. sovereignty and bypass the constitutional check and balance of the United States Congress.
Even more importantly Americans will find themselves paying more to insure their homes and families. Investors who relied on mutual funds to save for college educations or retirements will find they’ve earned less. And our small businesses on Main Street will suffer as sources of long-term capital begin to dry up. We must not allow this to happen.
